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View all search resultsGearing up for grid transition in Indonesia
In Indonesia, state utility PLN continues to fund grid development primarily through its own balance sheet; a model that places sustained pressure on its financial performance. Addressing financing challenges will be essential to ensuring the grid's readiness for a renewable-powered future.
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High wire act: State-run electricity company PT PLN's technicians work on a 150 kilovolt (kV) high-voltage powerline in West Kalimantan. The powerline's completion will raise the western Kalimantan electric grid's capacity by 4 percent to 45.1 megawatts (MW). (PLN/PLN)
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nvesting in the grid is investing in the energy transition. The International Energy Agency (IEA) projects that US$25 trillion of investment in grid upgrades will be required by 2050 to achieve our net-zero goals, equivalent to about one-quarter of the world’s annual total economic output today.
This need is even more pronounced in Southeast Asia, where legacy grid infrastructure is struggling to keep pace with regional demand growth.
In Indonesia, electricity consumption has increased rapidly, averaging about 4 percent annually over the past decade and reaching 289 terawatt hours (TWh) in 2023. Despite achieving a high electrification rate of 99.8 percent in 2023, the country's grid infrastructure remains challenged by the archipelagic geography, leading to inefficiencies and difficulties in accommodating distributed renewable energy sources.
Moreover, the majority of Indonesia's grid network is configured as a radial grid, like the spokes of a great wheel reaching out from a central location. While cost-effective for low-density areas, it suffers from efficiency and resilience issues. These factors collectively underscore the urgency for modernizing grid systems to meet changing energy demands.
Both transmission and distribution infrastructure will be vital for this transition. To align with the IEA's net-zero emissions scenario, average annual investment worldwide in transmission and distribution networks needs to be 88 percent higher from 2020 to 2030 than it was from 2012 to 2021.
Boston Consulting Group’s latest report, Delivering the Energy Transition Will Come Down to the Wires, explores how, if we’re to deliver on energy transition goals, we need to tackle complex and interconnected challenges and recognize that there is no transition without transmission.
Why grid investment matters
